Park Just Doesnt Get It!
Mirae Asset Leader Still Claims `Bear' as `Bull'
By Kim Tae-gyu
Staff Reporter
Despite a miserable failure in 2008, Mirae Asset head Park Hyeon-joo still attempts to build the hype that the equity fund market will flourish in the near future.
In a statement timed with the New Year, the founder of the nation's leading asset management company came up with optimistic views Friday on the fund market ― as he has done over the past few years, angering those who suffered huge losses last year after investing in equity funds, lured by Park's overly cheerful encouragement.
``The asset management market will continue to grow modestly in 2009. Thanks to the low interest rates, funds and pension markets will emerge as the only alternatives to the real estate bubble,'' Park said.
``As the proportion of older people is on the increase, the market for retirement years, including pension funds, will keep growing,'' he said.
In addition, the 50-year-old made it clear that Mirae Asset plans to sustain its focus on developing markets including China and Brazil. The two countries are where Mirae Asset lost the most last year.
``After recovering from the current crisis, emerging markets will return to their upward trend as the fundamentals of China and Brazil remain strong,'' Park said.
``I think that the significance of these countries will be more highlighted after we go through this crisis,'' he said.
Park is a self-made individual: After establishing Mirae Asset in 1997 at the age of 39, he made the group Korea's foremost asset and fund management company.
Record Loss
According to the Asset Management Association of Korea (AMAK), the country's investors are estimated to have lost up to 63.3 trillion won last year amid the global financial crisis.
In particular, overseas funds lost 34.6 trillion won, with the operating loss rate amounting to 53 percent. They typically directed money to such markets as China and Brazil.
Mirae Asset's flagship product, dubbed Insight Fund, was one of the biggest losers, with its loss rate reaching 50 percent last year, despite Park's remarks that the funds market will rebound immediately.
Disappointed by the 2008 performance, today's market consensus appears to be that equity funds will struggle, in negative territory at least, in the early part of this year.
``I also think that the fund market will expand over the long haul. During the first half of this year, however, the chances are that it may stay stagnant or shrink,'' Meritz Securities analyst Park Hyun-chul said.
Angry Investors
A subscriber of a Mirae Asset fund, who wanted to be identified only by the surname Oh, was angry with Park's statements.
``Last September, I invested a good amount of money into a Mirae Asset fund encouraged by Park, who said back then that things will improve in the near future,'' Oh said.
``I believed in him at my expense. What I want from Park is that he apologize for the false hype that he created but I don't think he will,'' Oh said.
Park recommended investors snap up equity funds last September when the global financial storm was about to hit the market both locally and globally.
In addition, Oh took issue with the high commission rate of Mirae Asset funds. The company charges as much as 3.39 percent for its flagship ``Insight Fund,'' higher than the industry average of around an annual 2 percent.
``Whenever I check my accounts, I become furious when I see Mirae takes more than 3 percent of my original investment every year regardless of the huge loss,'' Oh said.
``Legally speaking, they may have no problem at all. But they must stop doing that. I am reluctant to terminate the equity fund contract with Mirae right away because of the immense loss. Yet, I will never trust Mirae with my money again,'' he said.
In this climate, the Financial Services Commission, the country's top financial regulator, urged a reduction in the sky-high commission rates late last month.
In response, asset management companies have introduced packages with variable commission rates, such as those with fees that decrease every year.
When contacted, however, a Mirae spokesperson said that the company has no intention of slashing commission rates on any funds, whether they lose money or not.